Saturday 30 May 2015

Balance Sheet

Balance Sheet (also called Statement of Financial Position) consists of three things:
     1 ASSET : Total valuable things that company owned
     2 LIABILITY : Money borrowed from debtors
     3 EQUITY: Money received from shareholders and previous years earnings

The relationship between these three things are:

ASSET= LIABILITY+ EQUITY

*A company use the money borrowed from creditors (LIABILITY) and money received from shareholders and previous years earnings(EQUITY) to buy valuable things (ASSET)

ASSET can be further divided into 2 parts:
    1 NON-CURRENT ASSET : Asset that can not be turned into money within one year
    2 CURRENT ASSET : Asset that can be turned into money within one year

LIABILITY can be further divided into 2 parts:
    1 NON-CURRENT LIABILITY : Liability that must be paid off to debtors in more than one year
    2 CURRENT LIABILITY : Liability that must be paid off to debtors within one year.

Balance Sheet Template



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